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Italy Bank Pop. Bari Said to Plan Stock Sale as Cleanup Proceeds

(Bloomberg) -- Banca Popolare di Bari ScpA, an Italian regional lender weakened by bad loans, plans to raise as much as 350 million euros ($410 million) from investors this year to strengthen capital and complete the bank’s cleanup, people with knowledge of the matter said.

The lender will seek at least 250 million euros of fresh funds, the people said, asking not to be identified because the matter is private. The bank hasn’t decided on the method of the capital increase and may consider listing the company, two of the people said. A spokesman for the bank declined to comment.

Pop. Bari is one of the last big Italian cooperative banks that hasn’t yet completed a government-mandated transformation to a joint-stock company. The state is seeking to abolish restrictions on ownership and voting rights that had discouraged international investment and stood as hurdles to restructuring and possible mergers in the industry.

Banca Popolare di Bari, based in the Apulia region, was among lenders hit by mounting bad debt amid Italy’s longest recession and the acquisition in 2014 of the troubled Banca Tercas. The bank has been the first lender in the country to use a government guarantee meant to help banks securitize bad loans for sale, a move that allowed it to reduce its non-performing loan ratio to about 22 percent of the total in 2017 from more than 30 percent two years earlier. The lender aims to cut the ratio to about 10 percent, one of the people said.

A capital increase may start in September after the bank’s transformation into a joint stock company, according to the people. Its the second try for Popolare di Bari, which canceled plans in late 2016 to make the change and raise 300 million euros.

Popolare di Bari, the second-largest Italian cooperative bank, with 13.5 billion euros of total assets, broke even in 2017 after writing down 18 million euros of goodwill. The bank, which took on 2 billion euros of bad loans with the purchase of Tercas, has sold 1.3 billion euros of them since 2015. Still, it holds about 2.5 billion euros of NPLs, of which one billion euros may be sold this year.